Throughout time, societies have known that in order to survive, knowledge and experiences must be passed on to future generations. By passing on this knowledge, children could take what their parents learned in order to improve their own futures.
Fast forwarding to today, parents and grandparents pass on their knowledge to future generations all the time. All except one critical piece of knowledge that often gets left behind – money.
Research undertaken by the Money and Pensions Service reveals that less than half of parents (47%) talk openly with their children about money.
This means that millions of children and grandchildren miss out on gaining a vital early understanding of how to improve their financial position.
Nowhere is this issue more acute than with ‘pensions’. The risk of delaying pension saving can have significant financial consequences; needing to compromise on your retirement lifestyle, working beyond your normal retirement age, or needing to make significant contributions later in your working life.
The cost of delaying paying into a pension
Consider two pension savers, Sarah and George. Both started saving £100 a month until they reached age 68. Sarah started saving into her pension from age 25; George waited until he was 40 to start saving. The result is that the value of Sarah’s accumulated pension is almost £200,000 more than George’s pension.
* Figures based on a monthly level pension contribution of £100 to age 68, an assumed yearly growth of 7% and fund charges of 1% per year. Your own pension may grow at a lower or higher rate than 7%.
Juggling financial priorities
With the current cost of living pressures, inflation and increases in interest rates hurting many families, some may find themselves ‘deprioritising’ pension saving, in order to concentrate on their short term day to day finances. However it is extremely important to make sure everyone has a focus on the future. But avoiding talking as a family about saving for the future can leave everyone feeling anxious about what lies ahead and poorly prepared for the decisions they will face.
Broaching the subject
If you are struggling to find your way into a conversation, consider involving your Origen financial adviser. We are experts in facilitating family conversations – we can also check that everyone’s pensions and wider financial plans are on the best path, provide advice on how all family members can boost their retirement savings and income, as well as suggest ways to protect more of your family’s wealth.
For younger children, you can also help them to start saving tax efficiently, by starting a pension from when they are born and receive tax relief on your contributions. There are also further opportunities to put money aside, such as through savings accounts, Junior ISAs and Child Trust Funds.
Haven’t retired yet?
If retirement is starting to loom over the horizon, it’s a good idea to get expert advice from your Origen financial adviser at this stage to make sure your retirement savings are on track.
There’s still time to consider making additional lump sum contributions into your pension to boost your retirement savings. In addition it’s important to maximise your annual tax allowances for savings and investments.
Financial planning however, is not just about saving and investing money; you may be paying off a mortgage, or considering financial protection for your family in case of premature death or ill health, so a bit of planning now makes sure that your family and your wealth is protected for the future.
Families make the best decisions together
Our experience is that when families talk about their finances together, it brings everyone peace of mind, allowing you to enjoy your time together without anxiety about the future.
Origen is one of the UK’s leading national financial advisers and is authorised and regulated by the Financial Conduct Authority. We support clients across all generations, so whilst financial planning needs may vary, our advice is tailored to you and your family’s specific circumstances. That way we help everyone meet their financial goals, whatever the generation.
Let’s talk
If you’re ready to discuss your financial planning needs or have a question you would like further information on, please call your usual Origen adviser, or our Client Services team on 0344 209 3925 or email clientservices@origenfs.co.uk.
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CA10273 Exp:07/2024
